
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, September 29, 1995                   TAG: 9509290062
SECTION: BUSINESS                    PAGE: A-7   EDITION: METRO  
SOURCE: ASSOCIATED PRESS
DATELINE: WASHINGTON                                LENGTH: Medium

GROUP MAY TAKE 'FUNK' OUT OF MEASURING GDP

A new way of calculating the nation's economic growth was proposed Thursday by researchers who said the current system treats crime, divorce and natural disasters as economic gain.

The inventors of the new measurement said it could help explain the ``funk'' President Clinton has said he detected in a time of seeming national prosperity.

Redefining Progress, a research group in San Francisco, said it is not surprising many Americans are uneasy and sense the quality of life is deteriorating despite the steady increase in gross domestic product.

The growth over the past 20 years in GDP, the government's most comprehensive gauge of economic expansion, is badly misleading, the researchers said.

``By the weird standard of GDP, the nation's economic hero is a terminal cancer patient going through a costly divorce,'' the group said. ``All those medical costs will boost GDP. Splitting up a family means legal bills, counseling for the kids and the need for a second household complete with new appliances.''

GDP, the total output of goods and services in the nation, tracks consumption, business investment and government spending.

Redefining Progress suggested an alternative - the genuine progress indicator, or GPI - with 20 categories. Many of the components subtract growth by measuring depletion of natural resources and the cost of pollution, crime and family breakdown.

There also are new categories on the plus side, including the value of housework and volunteer work.

Ted Halstead, executive director of Redefining Progress, told reporters that GPI explains why polls show ``70 percent of the public is gloomy about the future.'' They said Clinton's recent talk of a national ``funk'' may have been on the mark.

Using GPI, Halstead said, the economy is declining at an annual rate of about 6 percent in the 1990s, compared with a 2 percent yearly decline in the 1980s and 1 percent the previous decade.

Clinton said last week his mission is ``to get people out of their funk'' in a time of rapid change and dislocations. He later said it was a poor choice of words.

Halstead and his colleagues have been campaigning to attract attention to their new system of charting the economy, including news conferences and a lengthy article in The Atlantic Monthly.

They plan to announce fluctuations in the indicator once a month, just after the Commerce Department releases its update on GDP.

by CNB